Article by Michael Portillo on green policies for The Sunday Times,
18 March 2007.

Before David Cameron became Tory leader you could not imagine that the party would campaign for higher taxes targeted at the middle classes. But last week it committed itself to a levy on frequent fliers. Equally, none of Cameron’s predecessors from John Major to Michael Howard would have looked convincing on a bicycle or hugging a husky.

The Conservative Party’s new stance on the environment has knocked the breath out of political opponents and commentators alike. The Transport Secretary, Douglas Alexander, accused Cameron of being “interested in headlines”, thereby unwittingly putting his finger on the central point. The Tories are majoring on climate change not just because they think there are votes in it in itself, but also because doing so challenges all the public’s assumptions about the party. The slogan could be: “If you thought you knew the Conservatives, look again”.

For years Tory modernisers have fretted that the party has no clause 4, referring to Tony Blair’s highly symbolic act in abolishing the commitment to nationalisation that was enshrined in Labour’s constitution. Once he had junked it, you had to believe that the party really had become New Labour. A few months ago it was doubted whether Cameron was serious about greenery. He would balk at introducing tough fiscal measures, his critics predicted. That challenge suited Cameron perfectly. With last week’s tax announcements he confirmed that the party is New Conservative in all but name.

So those analysts who chortle that Cameron has miscalculated, because the public is not really anxious to pay more for a greener planet, miss the point entirely. The electoral dividend that he seeks is only partly accounted for by voters who might switch to him because they care about the environment. His broader message – that the Tories are now worth another look – brings back into play millions of voters who have been beyond the party’s reach since 1992.

But even if it were just about winning the green vote, Cameron’s strategy is cleverer than it looks. To overhaul Labour at the next election is a Herculean task because it has a 157 seat advantage over the Tories. But it will be made easier if the Conservatives can take 20 or 30 seats off the Liberal Democrats, who are presently led by the ineffectual Sir Menzies Campbell. Many Lib Dem voters are Conservative types who for two decades have been repelled by the Tory Party’s hard edges. They are there for the wooing.

It was striking too that while Gordon Brown talked earnestly last week about the virtues of low-energy light bulbs, Cameron spoke passionately of endangered species. By associating himself with the plight of Bengal tigers and Rwandan gorillas Cameron creates a hotline to the nation’s children, and they are the route to the votes of mothers and teachers, two groups the Tories would love to win over. The Chancellor, I suspect, would be no more convincing on the subject of Arctic polar bears than he was on Arctic Monkeys.

So there is no mystery about why Cameron has adopted his policy positions. The only puzzle – one for historians – is why for a decade or more the Conservative Party sought and achieved electoral disaster by appearing hostile to the planet (as well as to public servants, single mothers, gays, ethnic minorities and the National Health Service). Cameron’s policy is entirely rational, meaning that he understands the self-interest of the Tory Party whereas William Hague, Iain Duncan Smith and Howard did not.

Brown’s quite different posture is equally rational in the context of the Labour Party. Whilst voters in my old seat of Kensington and Chelsea may be looking forward to forking out for hybrid-fuelled cars when they next change the family fleet, Brown’s electors in my grandfather’s home town of Kirkcaldy probably want the cheapest possible car journey to work. It is still partly true that the Tories represent the middle class and Labour the working class. Enthusiasm for tackling climate change is often proportionate to disposable income.

Perhaps Brown is, none the less, a tad too cautious (he often is). He has had searing experiences with “green” taxes. In 1999 he had to abandon the fuel duty escalator (introduced, surprisingly, by the Tories) which raised petrol and diesel prices by 6 percent more than inflation each year. In 2000, when oil prices were little more than $30, protesters against fuel costs brought chaos by blockading ports and refineries.

Incidentally, at the time I was shadow chancellor and I opposed the shadow cabinet’s wish to commit a future Conservative government to cut fuel duties. I was outvoted and the party made the foolish populist pledge. Cameron has forced the Tories to grow up.

Despite Brown’s caution the government last week took a step hailed by some as historic. The Climate Change Bill will supposedly commit governments to deliver a 60 percent reduction in the nation’s carbon emissions by 2050. Time will tell whether it proves historic. Even the first judgement of whether a government is in breach of its target will not be made until 2012.

Even so it is clear that British politics has suddenly shifted a long way on climate change. Perhaps because the economy seems to run itself and because the problems of education and health are intractable, politicians are rushing eagerly into environment policies. David Miliband, for the government, is every bit as zealous as Cameron.

Oddly both parties find themselves philosophically at home on this green terrain. Labour obviously feels comfortable taxing and directing. But we should not forget that the Conservatives (since they came under the influence of Milton Friedman) love to create markets where they do not yet exist. During the Thatcher years they yearned to establish the economic cost of things that were not transparently priced, such as driving on roads. Tory think tanks were already gurgling excitedly about road pricing thirty years ago.

In another way, too, the Tories could end up sounding as Margaret Thatcher did when in opposition. The promise on which she was elected in 1979 was not to cut tax but rather to transfer the burden from direct to indirect revenues. Her first large cut in income tax was matched by nearly doubling the rate of VAT, which was later raised again in order to cut the council tax. Cameron has been anxious not to promise tax cuts. But if he continues to pile up commitments to new green levies, he will be obliged to promise offsets on the taxation of incomes.

So far so regressive: indirect taxes bear disproportionately on those with low incomes, and cuts in income tax benefit the richest most. But there is an embryonic idea that could change all that, and both Miliband and Cameron are already toying with it.

If there are to be national emission limits, there has to be carbon trading. Indeed there already is, between companies. Those who want to pollute more have to pay to buy permits from those who have learned to pollute less, and potentially the sale price could rise very high.

But what if the scheme were extended to individuals? Every citizen would receive free an equal “carbon” allowance for travel. In that case, the Sunday Times columnist (for example) wanting to take his umpteenth business class transatlantic flight this year would be forced to buy credits from those who had found no use for theirs. Sellers might include the poor, young families and retired people, and the price they could command for the credits might soar. People who apparently had nothing might suddenly find that they owned something of real value. The Tories have long searched for a modern day equivalent of council house sales. Could this be it – the way to reconnect with the working classes, supply them with capital and ultimately render them bourgeois?

Last week’s flurry of green promises from Labour and Conservative must have delighted lobby groups like Friends of the Earth, who have so long toiled in the wilderness. If so, they should prepare for defeat. The massive ambition of reducing carbon emissions by 60 percent could only be achieved by a crash programme of building nuclear power stations. The sooner Brown and Cameron admit to that, the faster we can get on with reversing climate change.